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FedEx® Announces 2017 Rates, Lowers Dimensional Threshold

September 21, 2016

Author: Renee Bingling

It is a script that the shipping industry knows well – parcel shipping giants, FedEx® and UPS® announce their rate increases in lock-step. This time however, there are some noteworthy scene changes. UPS started the trend by announcing their annual General Rate Increase (GRI) a little earlier than expected and true to form, FedEx followed with its recent announcement; but has deviated from matching UPS rates for the first time in recent years.

Here are some highlights from the announcement:

On January 2, 2017, FedEx Express® and FedEx Ground® U.S domestic dimensional weight advisor will be adjusted from 166’’ to 139’’. It is noteworthy that FedEx has matched their domestic dimensional weight advisor to that of its international import and export, less than two years after the change from 199” to 166”. With this adjustment, more than ever shippers need to consider a multi-carrier strategy when it comes to shipping. Such multi-carrier options could include regional parcel carriers, many of whom have less-costly dimensional weight policies or the U.S. Postal Service™ for parcels, which does not apply Dimensional Weight (DIM Weight) charges if your parcel travels less than 1,000 miles. For more about each carrier’s policy on Dimensional Weight, please see here.

On February 6, fuel surcharges will also be adjusted weekly instead of monthly, which reduces the lag time between U.S. government fuel index changes and its surcharge adjustments to two weeks from two months. Industry experts are buzzing that the move to weekly surcharges may signify that FedEx may be anticipating that fuel costs may increase next year and a weekly adjustment may be best to manage revenue.

Other Noteworthy Changes:

FedEx Express rates will increase by an average of 3.9% for U.S. domestic, export and import services.

FedEx Ground and FedEx Home Delivery® rates will increase by an average of 4.9%, with FedExSmartPost® rate also changing.

Freight shipment rates will increase by 4.9% and customers will be charged more to ship large packages.

FedEx Freight® extreme length surcharge will increase from $88 to $150 and will be applied to shipments 12 feet or more compared to the prior 15 feet.

How does this affect you?

A change to Dimensional Weight can have serious cost consequences for an organization if they are not planning effectively and do not have the visibility to know if this is a problem. A 12 x 8 x 8 small box that is commonly used to ship electronics with an actual weight of 1lb would have given you a dimensional weight of 5lbs less than five years ago. Starting in 2017, however, the dimensional weight on that same package is 8lbs In dollars and cents, that package might have cost you around $12 to ship ground just a few years ago; in 2017, it could cost you $14-15.

What can you do about it?

The recent carriers’ increases have once again impressed upon customers the need to weigh the variance between carriers’ rates to ease the pressure on shippers’ bottom lines. More importantly, customers have recognized that dimensional weight has played an even more significant role in weighing carriers’ costs. With DIM weight shipping now a major shipping cost consideration, businesses will discover the importance of DIM weight tools to cost-effective shipping. For example, an online DIM weight calculator can take the guesswork out of calculating each carrier’s parcel DIM weight for easy costs comparison, in addition, dimensioning equipment can get your shipments through the door faster, by dimensioning any shape and size in less than a second.

Comments

September 27, 2016 at 9:07 am

Paul Betson

Would someone please investigate why both FedEx and UPS have not reduced their gasoline surcharge. Gasoline has went down near $1.50 per gallon for some time (reached $3.75 gal); yet, the gas surcharge continues to appear on every invoice !

Hi Paul,
Part of the FedEx announcement was that fuel surcharge will actually be a weekly adjustment now, instead of monthly (as of Feb, 2017). So, in theory, there may be some chance that fuel will go down because the adjustment will be done more regularly. Of course, the opposite could then also come into play. If you would like, I can put you in touch with someone that can give you more information on this topic. Just reply YES and I will send him your contact information. Thanks!

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